ENERGY | According to IEA : India, Single Largest Contributor to Global Energy Demand

The International Energy Agency (IEA) has recently released a
special report on India’s energy outlookthat maps out both the
constraints and challenges that the country faces. According to the IEA, India
is already the single largest contributor – about 25% – to growth in energy
demand globally. As India hosts 18% of the global population, and accounts for
only 6% of global energy use, the IEA estimates that the growth in demand will
continue.

It bases its
assumption on three crucial factors:

1) one fifth
of the Indian population – 240 million people – still do not have access to
electricity and two-thirds do not have access to clean cooking fuel;

2) India is
rapidly urbanizing, driving up energy demand; and

3) the Indian
government has committed itself to expand manufacturing growth through
initiatives such as the “Make in India” campaign, which will require massive
growth in energy supplies to be successful.

The Irreducible Cost of Oil

The report,
focusing on growth until 2040, estimated that the European Union, US and Japan
would see negative growth in energy demand as the populations aged, and energy
use was cut back. Growth was predicted in Latin America, the Middle East and
Africa, with China’s demands growing faster still. India would still be the
leader in energy growth, much of it carbon based. Dr Fatih Birol, the IEA
Executive Director, said that the IEA estimated that by 2040 India will triple
coal production while also increasing imports.

India will
also become the largest oil importer in the world, with 63% of it coming from
the Middle East. The IEA highlighted the costs of oil imports to the Indian
economy, stating that, “India’s growing reliance on oil and gas imports carries
with it a large bill. The value of India’s net oil and gas imports grows from
USD 110 billion in 2014 to more than USD 300 billion in 2030 and USD 480
billion in 2040 (of which gas accounts for some 10-15%). This represents a
sizeable share of India’s overall GDP – 5.3% in 2014 and 4.6% in 2040.”

The Promise
of Renewable

The great
bright spot was the expansion of renewable energy. The IEA envisages a massive
expansion of installed capacity based on renewable energy, going from less than
100 GW in 2014, to more than 450 GW in 2040.

The IEA
projections clash slightly with those of India in its Intended Nationally
Determined Contribution (INDC), as the IEA projects that India will only be
able to build an installed capacity of 150 GW from renewables by 2020, which
makes it difficult to believe that India would achievea 175 GW
installed capacity by 2022 as it has promised in its INDC. Nevertheless by
2030, the IEA estimates that India will derive more than 40% of its energy
through renewable energy, exactly in line with the INDC.

Clouds of
pollution

Nevertheless
one of the key sources of energy will be coal, either just a little less than
renewables or a little more, as one of the two biggest sources of energy. This,
as well as the massive growth, will have a major effect on air pollution. The
outcomes are fairly scary, with the IEA stating:

“The rise
in outdoor PM 2.5 emissions alone is calculated to lead to a reduction in life
expectancy of more than seven months (this is in addition to the 16.8 months in
reduced life expectancy that is a result of current PM 2.5 levels). This
corresponds to a 140% increase in premature deaths, which reach 1.7 million in
2040. Indoor air pollution, from the continued though diminished use of solid
biomass for cooking, could be expected to add considerably to this number. In
addition, the rise in ground-level ozone leads to crop losses. By 2040, the
increase in ground-level ozone gases leads to a 13% decrease in wheat yield and
will have adverse impacts additionally on soybean, rice and maize crops.”

Strict
policies to control and deal with the levels of pollution will be a must.
Additionally water usage by coal plants – which account for 95% of water usage
in the energy sector – as well as the effects of climate change, threaten to
add a dark lining to India’s bright energy future.

Lastly the IEA
estimates that India will need an annual investment of more than USD 100
billion from 2015-2040 to make this great transition, a challenge indeed, since
between 2005-2014, the investment level has been just over USD 60 billion per
annum.

This article was originally published at The Third Pole under Creative Common License 2.0